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SouthGobi Resources updates reserve, resource estimates for Ovoot Tolgoi mine

SouthGobi Resources Ltd. on March 31 released updated reserve and resource estimates for its Ovoot Tolgoi coal mine in Mongolia.

Proven and probable reserves, comprising the Sunrise and Sunset deposits at the mine, total 114.1 million tonnes.

The mine hosts measured resources of 201.9 million tonnes, indicated resources of 100.3 million tonnes and inferred resources of 89 million tonnes. Resources comprise surface and underground material and were reported inclusive of reserves.

SouthGobi noted that it previously reported 175.7 million tonnes of proven and probable reserves at Ovoot Tolgoi in a 2012 technical report.

In mid-2016, the total resource decreased significantly, and the reserves were eliminated as a result of declining coal prices and weak coal transaction conditions in China, as well as the reclassification of the deposit's geology type from complex to severe.

The company went on to undertake a comprehensive review in late 2016 which resulted in a re-estimation of reserves.

SouthGobi produced 3.38 million tonnes of raw coal in 2016, up from 1.95 million tonnes in the preceding year.

Sales volumes increased from 1.07 million tonnes in 2015 to 3.91 million tonnes in 2016, which was partially offset by a decrease in the average realized selling price from US$17.66 per tonne to US$16.44 per tonne.

Revenues more than tripled year over year, from US$16 million to US$58.5 million, resulting in the company's net loss narrowing significantly from US$186.8 million to US$60.8 million.